The FinTech Council of the German Federal Ministry of Finance considers a referral of the Federal Government with the Blockchain regulation overdue. In an opinion on the blockchain strategy of the Federal Government is present, the experts demand a regulation by eye. It is important to understand the enormous potential of the technology without neglecting the very real risks. And that’s better yesterday than tomorrow.
It is provoking something in the German blockchain regulatory landscape. The Federal Ministry for Economic Affairs and Energy (BMWi) has concluded a public consultation with the Federal Ministry of Finance (BMF) on the development of a blockchain strategy. Between February 20 and March 29, associations, companies and organizations had time to share their positions and recommendations with ministries.
Among other things, the FinTechRat of the German Federal Ministry of Finance participated in the survey, for which www.blockchain-strategie.de has its own homepage. On 19 pages, the panel of experts made it clear why the development of a coherent blockchain strategy was long overdue. In addition to representatives of the classic financial world and the fintech industry, FinTechRat also includes well-known blockchain experts such as Prof. Dr. med. Philipp Sandner, head of the Frankfurt School Blockchain Center.
The most important recommendations at a glance
The statement provides an in-depth overview of the various potential uses and the risks and side effects of Blockchain and other Distributed Ledger (DLT) technologies. From asset tokenization to the legal implications of smart contracts to DSGVO compatibility of blockchain transactions, there are few regulatory areas that do not affect Finforce Council’s foretaste.
At the end of the expert panel comes to nine core demands:
The experts demand from the legislators a regulation that considers distributed ledger technologies detached from their technical implementation.
Focus on providers and service providers
The FinTechRat also recommends that special attention be paid to the suppliers of crypto and blockchain-relevant products and services in the regulation. The interface between the crypto and real economy, for example in the form of token-based IoT solutions, should also be the focus of regulatory efforts. Along with this comes the question of enforcing the rule of law in the face of decentralized systems.
In view of the rapid technological development in the area of DLT, the implementation of the blockchain strategy should take place as soon as possible.
Meaningful block chain regulation can not stop at national borders in the long term. In particular, it is important to avoid creating regulatory “oases” within the European Union within which laxer laws apply.
The fact that security token offerings eliminate the documentary securitization customary in securities trading is one of the advantages for those who opt for this new financing vehicle. The FinTechRat also extends the concept of dematerialisation to any form of writing requirement. A “proper registration” plays a central role here.
The blessing of uncompromising transparency that Blockchain technology promises can quickly turn the bane when it comes to privacy. A meaningful regulation of the technology should therefore pay particular attention to the fact that “hash values and public keys do not constitute personal data” as long as they can not be used to “recreate the original data”. Furthermore, the experts point out that the right to information about one’s own data can also be implemented in the case of a decentralized system without a direct contact person such as Blockchain.
No technology can develop when there is a lack of experts. Therefore, the FinTechRat calls for training in the field of DLT. This applies both to universities and to continuing vocational training.
Definition of the requirements for tokens
It has already been shown that tokens are not the same token. In the future, variety of token use cases will increase even further, the statement goes on. A separate consideration of the individual use cases – in particular of utility tokens – the FinTechRat, however, considers “not effective”.
The regulation has lagged significantly behind the industry-driven technical development so far. It is therefore of particular importance for Germany as a business location to create a broad and, if possible, technology-neutral basis for decision-making, in particular for issues relating to blockchain security.
Research field for Germany or the EU
Finally, the panel of experts requires legislators to provide a reliable basis for determining the regulatory compliance of a DLT. Here, the regulation of the industry-driven development of Blockchain and Co. lags significantly behind. This is particularly about the question of the reliability of blockchain systems – especially against the background of a Blockchain-based securities registry. Accordingly, the FinTechRat calls for the research efforts in this field to be stepped up.
High participation in Blockchain consultation
As part of a small request, FDP parliamentarians asked, inter alia, how the participation in the Blockchain consultation had failed. As can be seen from the answer given, it was pleasingly high. Accordingly, a total of 429 representatives have registered for the consultation. Proposals were received from 158 participants. Based on their self-assessment, these included:
- 55 to companies
- 33 to associations
- 28 to start-ups
- 25 to organizations of research, teaching, education, education
- 8 to authorities
- 7 to foundations
- 2 to others
Frank Schäffler is one of the co-initiators of the Small Inquiry. In contrast Schäffler emphasized the importance of a regulatory framework for the new technologies – although not without a hint of skepticism as to whether the Federal Government’s competence in this undertaking shows through:
“The high level of attention for the Blockchain Consultation highlights the importance of the industry to finally put in place a solid legal framework for this technology of the future, which the FDP has been calling for since last year in its blockchain technology application what the federal government is presenting on this topic in summer, said the parliamentarian in an e-mail. Schäffler is thus in line with his party comrade Mario Brandenburg, who in an interview has already called for the introduction of a “Regulatory Sandbox” in which FinTech and Blockchain companies can try out.